According to Section 7 (5) of the Labuan Companies Act 1990 (LCA), the Labuan company permits residents and non-residents of Malaysia to start a Labuan company. The Labuan companies are responsible for filing notifications to Labuan FSA within 10 working days of the transaction.
The Business transaction of Labuan companies must be made in currencies apart from Malaysian Ringgit this is exceptional for the purpose of defraying administrative and statutory expenses which includes fees and commissions.
Labuan companies helps in controlling stakes in a Malaysian company which are domestic and also, they allow to undertake shipping orders mostly from non-residents.
A Labuan company can be limited by shares or by guarantee or by unlimited company. Labuan companies can participate in business activities and have access to various tax benefits provided by the Labuan Business Activity Tax Act (LBATA).
The Labuan company can do business which is permitted in Malaysia from or by Labuan. The company needs to be Licensed when it wants a specific business as per the instructions of Labuan Financial Services and Securities Act 2010 or by the Labuan Islamic Financial Services and Securities Act 2010 where additionally banking, insurance, fund management, leasing, factoring and company management business are related.
Requirements for Labuan company formation
Here are some requirements for Labuan company formation in Malaysia:
- Labuan company has to be incorporated with an agent; an agent recommended from the same place.
- It is required that the company to be a registered company with the secretary who is a resident.
- Has to perform the secretarial duties in the Labuan company which includes duties such as preparation of documents required under the LCA.
- Arrangements of availability for any trust officers for appointment as a director of resident and secretary resident.
- It is required to at least 1 director.
- There are no requirements of minimum capital and authorization of capital
- The issues of shares shall not be without par and nominal value
- The treasury shares are allowed
- There might be issues on shares for different classes and for different rights but bearer of shares is allowed
- Amalgamation with two or more in one company is allowed
- It is requirement to have a registered office in Labuan which is the office resident of the company secretary
- Nobody can take another information from the shareholder, manager, business and financial person or any other transactions from Labuan company.
Labuan entity: It is important to set up the right company. You need to clearly understand that establishing a right entity is important stage for the whole business.
Tax efficiency: When your objective is to start a Labuan company you also need to give importance to your tax to achieve your goal.
Strategic plan: The plan which is formed for your company is very important. There need to be output from the plan where it can be functioned for everyday basis.
Labuan company registration fees
|REGISTRATION FEES||AMOUNT – PAID-UP CAPITAL|
|RM 50,000 and lesser||RM 1,000||USD 300|
|Exceeds RM 50,000 but less than RM 1 million||RM 2,000||USD 600|
|RM 1 million and above||RM 5,000||USD 1,500|
|Foreign company registration||RM 6,000||USD 2,000|
|Labuan company||RM 2,600||USD 800|
|Foreign Labuan company||RM 5,300||USD 1,500|
Benefits of having a Labuan company
- 100% ownership of the company
- Most Labuan companies do not require a trading license
- The company with the corporate tax of 3% can deal with Malaysian market
- There is low tax rate of 3% on net profit with audit reporting
- The company can be functioned in any foreign currencies and Malaysian Ringgit bank accounts
- For foreign directors there will not be any necessity for personal tax
- Labuan companies can be applicable for Marketing office in places such as Kula Lumpur, Kota Kinabalu and Iskandar which are situated in Malaysia
- Companies which are investment holdings are companies which are 0 tax with no requirement of audit
- For foreign managerial employment there will be 50% of personal tax rebate
- A foreigner can live anywhere in West Malaysia and Labuan
- The Labuan work visa is multiple entry where it can be renewed for 2 years
- The Labuan visa can be extended for also spouses, children and parents.
When Labuan company can be functional?
Labuan company can be established when the submission of Memorandum and Articles of Association can be done.
What is the main business-activities in a Labuan company?
The activity of a Labuan company mostly relies on trading and non-trading activities which are functioned by residents and non-residents of Malaysia
Can foreigners function Labuan company in another country?
Though the flexibility is high in Labuan companies it is only flexible within Malaysia
Are there any audit requirements in a Labuan company?
Yes, it is required for Labuan companies to maintain proper accounts in the company. There has to be maintenance of proper financial statement.
Is it necessary for the secretary and shareholders to be a Malaysia?
It is a must for a secretary who has to reside in Malaysia, but as for shareholders they can either be a resident or non-resident of Malaysia.